The Federal Government yesterday announced the terms of reference for the Policy Transition Group (PTG) that will oversee the implementation of the Minerals Resource Rent Tax (MRRT).
The Group, will be chaired by former BHP Billiton chairman Don Argus and the Minister for Resources and Energy, Martin Ferguson.
“The PTG, which will consult with industry and provide advice on the implementation of the resource taxation reforms, will also include Keith Spence, Dr David Klingner, Erica Smyth, Chris Jordan and the executive director of the Treasury responsible for tax policy, David Parker, in an ex officio capacity,” Ferguson said in a statement.
“The PTG will commence its work after the outcome of the election is determined.”
The Government has given the Group a license to make alternations to the technical design of the tax, provided they do not change the budget outcomes.
“Any policy deviation from the Government’s announcement of 2 July 2010 is to be fully offset within the recommendations in terms of impacts on revenue or costs,” the Government said.
The Group will provide advice on any design changes as well as the transition of existing projects to the Petroleum Resources Rent Tax (PRRT).
“In developing this advice, the PTG will consult with directly affected companies, relevant government departments and stakeholders on the implementation of the new MRRT and the extension of the PRRT to ensure the new tax arrangements are implemented as efficiently and consistent with the design principles as possible,” the Government said.
The group will discuss the taxing point and valuation method used for each commodity, the eligible project expenditure, the definition of exploration expenditure and the determination of the starting base for existing projects.
Other issues, like a workable exclusion where resource profits are below $50 million per annum and the crediting of state and territory royalties, will also be discussed.
In addition the Group will also look at ways to encourage future exploration, in lieu of the axed Resource Exploration Rebate.
The PTG will report back to the Government at the end of the year.
The group members will add significant mining experience to the discussions.
Spence retired from Woodside Petroleum in 2008 after 14 years with the company, Klingner worked for Rio Tinto for 38 years and Smyth is the current chairman of Toro Energy.
Jordan is the chairman of KPMG New South Wales and Parker is a member of the executive board of the Treasury and chairman of the Treasury Audit Committee.
impacts on revenue or costs.